Tether Is Lending Its Stablecoins Again

Tether's stablecoin loans surge in 2023, raising concerns about reserves and meeting redemption requests. Tether aims to nullify loans by 2024.

Sep 21, 2023 - 18:36
Oct 19, 2023 - 14:27
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Tether Is Lending Its Stablecoins Again
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Tether, the entity behind the USDT stablecoin, has faced its share of skepticism, especially concerning its reserves. Recent data indicates a renewed interest in Tether's lending activities. Reports suggest a notable surge in Tether's loans, moving from $5.3 billion in Q1 2023 to $5.5 billion in Q2 2023. This uptick is attributed to short-term loan requests, primarily from clients who have maintained a long-standing relationship with the company. Tether Holdings spokesperson Alex Welch said:

"During the second quarter of 2023, we received a few short-term loan requests from clients with whom we have cultivated longstanding relationships, and we made the decision to accommodate these requests."

Tether stablecoin loans on the rise in 2023 (Source: The Company)

The company had previously set a goal to nullify its loans by 2023; however, recent communications hint at a postponement of this target to 2024. A significant concern is the mysteriousness surrounding the borrowers and the nature of assets accepted as collateral. Additionally, with the resumption of lending, there are concerns about Tether's capability to meet sudden spikes in USDT redemption requests, especially if there are delays or defaults in loan repayments.

Tether has been vocal about over-collateralizing its loans, suggesting a robust safety mechanism in the event of defaults. Financial reports have spotlighted Tether's impressive excess reserves, which reportedly exceed $3.3 billion. In the official blogpost, Tether said that: 

"Anyone with a minimum understanding of financial markets would see how a company having $3.3 billion in excess equity and on track to make a yearly profit of $4 billion is in all effects offsetting the secured loans and retaining such profits within the company balance sheet."

The company doesn't share detailed financial records or balance sheets, making things unclear, which adds more complexity to the surrounding topic.

Philip Bohmer Philip is a seasoned journalist that brings clarity to the complex world of cryptocurrencies through his articulate and insightful articles. His passion for blockchain technology fuels his writing, making him a trusted voice in the rapidly evolving digital currency landscape.